Australia’s retirement savings gap is one of the biggest in the world!
- Only 53% of couples and 22% of single people are on track to achieve a comfortable level of retirement income with their savings, according to an in-depth study of the adequacy of retirement savings.
- The Australian Bureau of Statistics recently released the highest life expectancy estimates ever recorded in Australia, indicating that many people easily live for another 20 years after they retire at 65.
- A survey of people’s attitudes regarding retirement savings shows that, while Australians expect to spend over 20 years in retirement, their money will run out after only 10 years, leaving them to rely on the age pension.
- For most people, their superannuation is not sufficient to fund a comfortable retirement, even though they have contributed to their funds for most of their working lives.
With this in mind, it is essential that you take action to maximize your income for your retirement savings. Obviously the earlier you start preparing for retirement, the more options you have to set a course that suits you. It’s never too late to boost your retirement savings and there are actions that you can take no matter what your age. The important thing is to take action now and speak to a professional who can review your situation and come up with a tailored strategy that will work for you, both now and in the future.
Avoid retirement planning mistakes
Retirement is a lot tougher than it once was. Gone are the days when a retiree paid off the family home, put away some savings, made a small investment or two and lived happily ever after. In this era, it takes careful planning to have enough money for retirement savings. If you want a comfortable retirement you should avoid the following crucial mistakes.
1. Failure to plan
As the old adage goes, “If you fail to plan, you plan to fail.” The 2011 ANZ Survey of Financial Literacy in Australia, which is the ANZ’s most recent, revealed that only 37% of Australian adults provided an estimate of how much money they would need for retirement savings. A good plan should include which risks you deem to be acceptable, which investments you want to make, how much you have to invest, your preferred cash flow and what insurance you need to protect your investments.
2. Failure to formulate a budget
If you want to achieve investment success and ensure your goals for your retirement savings are met, you should formulate a budget and stick to it. A budget accomplishes two things: it indicates where your money is going and earmarks a set amount for your future savings.
3. Failure to invest
Keeping your money in the bank may not keep you abreast of inflation. Investing in property or shares generally generates better returns. How you invest depends on your personal risk profile and the goals that you have.
4. Going it alone
You need a professional on your side to truly maximise your retirement savings and investments; someone who is trained to consider a plethora of factors that pertain to generating wealth for retirement.